A new report by eMarketer says that online video ad spending will hit $5.8 billion by 2013, up from $505 million right now. That’s a jump in share from 2 percent of total online advertising to 10 percent. But the report warned that CPMs may drop in the coming years due to 1) the novelty wearing off 2) lack of scarcity and 3) web users are less inclined to watch video ads than TV viewers. (This last point, as written in the ClickZ article, makes little sense. But I think the point they’re trying to make is you can’t port over the same commercial load from TV to the web and expect users to sit through them. Part of the allure of online shows is short, infrequent commercials, which also has a net effect of higher ad recall. While this drives up CPMs now, if this inventory is allowed to grow to TV levels, ad recall will drop and suppress CPMs.) At any rate, the bottom line here is that online video remains a substantial and rapidly-growing business.
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